The Hong Kong government will not ban e-cigarettes but will opt for taxation and legalization because the potential revenue would be huge, a venture capitalist told students at Hong Kong Baptist University on February 21.
The prediction was made by Derek Kwik, an investor in an e-cigarettes brand that won a best product innovation award in the U.S., and came after the Hong Kong government announced that it was pushing ahead with a plan for a blanket ban on e-cigarettes, with a maximum penalty of six months in jail and HK$50,000 fine for those who trade in them.
The business of the co-founder and CEO of Brave Soldier Venture Capital will not be affected directly by the proposed law since his company’s market is in the U.S.
Kwik said not only the e-cigarettes would become legal, but that the inhalation technology they use will grow outside the industry, most specifically for medicine delivery in the pharmaceuticals sector.
He noted that many governments have changed their minds about legitimizing vaping, as smoking the new cigarettes is called.
Taking Thailand as an example, Kwik said the government has made U-turns on the use of e-cigarettes several times in less than two years and finally legalized and taxed e-cigarettes.
“They are just flip-flopping,” said Kwik, pointing out that the reason for the Hong Kong government’s ban plan is that there is no tax on the product yet.
According to a survey on the pattern of smoking of the Hong Kong population aged 15 and over directed by the Census and Statistics Department in 2017, of a total of 620,600 daily smokers, some 5,700 consumed e-cigarettes, which is a more than fivefold increase from the figure of 1,000 in 2015.
In the 2019-20 Budget released by Hong Kong Financial Secretary on Wednesday, the actual duties revenue from tobacco in the last fiscal year was HK$6.4 billion (US$ 818.6 million), 12 times more than that from alcohol. Kwik pointed out that this was an incentive for the government to legalize the new smoking.
Indeed, he said, legalizing and taxing e-cigarettes is in the business interest of everyone involved since investors, factories, and sellers can profit from the growing market, and consumers can get healthier products, while the government can make money from e-cigarette taxes.
“So it’s win-win for everybody, this is just a question of time,” he said.
Kwik also explained how the inhalation technology used in e-cigarettes would be applied to the pharmaceutical industry.
He said that current medicine delivery via the mouth is relatively inefficient, but atomized liquid medicines delivered through the kind of inhaler used for e-cigarettes would work better by going directly to the lungs.
Removing the nicotine from e-cigarette devices and replacing it with aspirin or other liquid medicines will make children and the elderly feel more comfortable to receive treatment rather than taking pills and injections, said Kwik.
“So pharmaceutical companies are helping, and waiting for the technology to catch up,” said Kwik.
This new use would prove far more lucrative in the long run, making e-cigarettes and their technology a massive business.
Chen Yuyang, Feb. 27, 2019